A Look At The Indian Data Center Market In 2017

There is a huge growth in the Indian data center market. According to Gartner, India became the second fastest growing market in APAC last year. The current data center market in India is valued at $2.2 billion, and is expected to touch $4.5 billion mark by 2018. Main drivers for this huge increase are growth in data and digital intelligent devices, digitalization and also the government’s Digital India campaign.

Captive vs outsourced model

Data centers are usually operated using one of two main models: the first is for an organization to build, operate, and manage its own data center for internal purposes, known as a captive data center. The second is the outsourced model, where organizations lease space and hosting services from external data center providers.

Today, many organizations are moving from a captive data center model to outsourced model because of zero capital investment, high operational efficiency and scalable infrastructure. According to Frost & Sullivan (F&S) Asia Pacific Data Center 2017 report, while there is a greater adoption of managed hosting services (outsourced model), colocation services (captive data center) continue to dominate data center revenue. This will continue to be driven by large enterprises and highly regulated verticals such as banking, financial services and insurance (BFSI), which require strict data confidentiality and complete management control of their operations.

Data center localization

Over the past few years, multiple countries have enacted data localization laws. Also, due to regulatory and security reasons, many organizations in India, especially from the BFSI sector, are not willing to host their data in a data center that is out of the country.

As a result, the data center providers are forced to set up local data centers in India. Recently, US tech giant Oracle said it will set up a local data center to expand its cloud services. IBM already has two data centers in India (Mumbai and Chennai) and NTT Communications has three (Mumbai, Bangalore and Noida).

Infrastructure-as-a-Service

According to Gartner, India will see Infrastructure-as-a-Service (IaaS) eclipse traditional data center outsourcing by the end of this year.

In India, traditional data center outsourcing spend is forecast to reach $559 million in 2017, while cloud spending will total $677 million. Gartner analysts also predicted that by 2021, cloud computing and storage as-a-service will be nearly three times more common than traditional data center outsourcing.

A bigger focus on cloud, mobility and analytics has made many organizations rethink their data center strategies. Organizations in India are evaluating data center architectures that would provide them the agility, flexibility and the scale desired for new application workloads.

Subho Ray, president of IAMAI, believes that India has the potential to capture a big share of the global data center market. But this will only be possible when the country addresses the risks and barriers to data center operations, and creates the right incentives for businesses to build efficient data center infrastructure.

Thus, the future of data center market is quite bright in India, but it will all depend on efficiency and scale.